Fund Managers Hike Commodity and EM Exposure to Three-Year High but Raise Cash Levels

(MENAFN- ProactiveInvestors - UK) Fuller Treacy Money, 08:32

Fund Managers Hike Commodity and EM Exposure to Three-Year High but Raise Cash Levels
Here is the opening of this interesting report from Investment Week:

Investors are no longer underweight commodities for the first time since December 2012, according to the October Fund Manager Survey by Bank of America Merrill Lynch.
The report said the move has been driven by inflation expectations being at a 16-month high and the lack of value seen in developed bond and equity markets.
Furthermore, there has been a surge in oil prices in recent months with OPEC agreeing to limit supply and Russian president Vladimir Putin supporting the plans. Brent Crude is currently trading at $51.75 a barrel.
However, Adrian Lowcock, investment director of Architas, added "if OPEC fails to deliver on its promises, there is a mild winter or a slowdown in demand then we could see another slump in oil prices".
Oil jumps 6% as OPEC surprises with production cut
Meanwhile, gold prices continue to rise, up 26% this year, due to political uncertainty in the US and across Europe.
The survey also highlighted a rotation out of healthcare/pharma, REITs and bonds, into banks, insurance, equities, and emerging markets.
Emerging market equities positions rose to their highest overweight in three and a half years, from a 24% allocation last month to 31% in October.

David Fuller's view
With most investors keeping a close eye on US markets, not least because of their size and influence, and with additional interest in next month's Presidential Election and especially the Fed's probable rate hike in December, we can expect some volatility.
We also know that a number of central bankers and also international economists are calling for more fiscal spending to spur GDP growth. There are also calls for corporations to invest in the development of their business, rather than just parking capital in financial assets or using it for share buybacks.
Against this background we should not assume that inflation will remain dormant. In fact, the cost of living has increased for most households. They are experiencing rising property prices in many countries, higher rents, increased school fees and insurance costs, to mention just a few contributors to the inflation which is seldom mentioned in financial reports.

Why It Is Time for a New Campaign for Brexit
Here is the opening of this topical column by Allister Heath for The Telegraph:

There is no such thing as permanent victory in politics. History never ends: triumphs are fleeting; majorities can turn into minorities; and orthodoxies are inevitably built on foundations of sand. Communism was supposed to be discredited forever after the collapse of the Berlin Wall; yet many young people in Britain and America now call themselves socialists.
Progress is never guaranteed in politics: there are just ups and downs and swings of the pendulum.
This applies to Brexit too, of course: those who thought that Leave's victory on June 23 somehow settled the question were deluded. The good news is that it remains likely that we will leave the EU in 2019.
Theresa May is fully committed and will be canny and steely in her negotiations. But the Remainers are staging a fight-back which is beginning to inflict serious damage on the Brexiteer cause.
Every piece of bad news is blamed on Brexit; an endless supply of reports, economic 'forecasts' and articles explain how leaving the EU is self-evidently bound to hurt us, slash our GDP, make us the world's laughing stock and wreck our prosperity. Even Ed Miliband and Peter Mandelson are back.
Remarkably, given that the insurgents were meant to have seized power, the propaganda wars have been one-sided: the Government isn't really taking part, and the other Brexiteers have vacated the battlefield.
Unless Mrs May decides to change tack, and becomes much more aggressive in defence of the policy that will come to define her, the Brexiteers will have only one option left: reconstitute a version of Vote Leave and relaunch a full-throttled, independent campaign.
One thing is cLear: concern is mounting in Eurosceptic circles.
It's not just the specifics of how we leave the EU that are still up for grabs. Some Remainians still hope that withdrawal can be delayed long enough for it never to happen; others are discussing whether Article 50 could be reversed once it's invoked.

David Fuller's view
I sympathise with these comments and the sentiments of many friends and colleagues who voted for Brexit. Wouldn't it be wonderful to fast forward and be entirely outside of the EU, a sovereign state once again, trading with the global economy and not just the failing EU.
To happen anytime soon, this requires a declaration of Article 50 in early January, followed by a list of UK terms for trading with EU partners in our mutual interests, which does not impinge on UK sovereignty. This is not a blink moment for the UK. It is a final offer, which we should assume will probably not be accepted by Merkel and Hollande, in which case we respectfully withdraw. I believe this is what Patrick Minford and Roger Bootle advise, and they would be very useful contacts for the Prime Minister.
EU threats of fines, ongoing commitments and binding agreements extending well into the decade, which have been bandied about, are little more than attempted bullying tactics to prevent any country, heaven forefend, from leaving the dysfunctional EU. There are no Brexit terms; the UK is creating them as it leaves.
Would hard Brexit result in turmoil? Almost certainly for a brief period. Thereafter, I think the majority of UK citizens and residents from other countries contributing to the UK economy would welcome the new challenge and get on with it in our mutual interests. The UK government should now be forming its plan of action and recovery, in this event.
The Prime Minister may think a more cautious, exploratory approach could be more effective, not least as dissatisfaction and turmoil within the EU is not only increasing, but could easily lead to the electoral fall of Holland and perhaps also Merkel in 2017. Perhaps, but that would not necessarily favour the UK. Moreover, a long drawn-out negotiating process would likely be far worse for the UK - in terms of national morale, unity and capital - than a swift, hard Brexit.

Want to Know Why Central Bankers Can Not Solve World Problems? Read a Book
Here is the opening from this is a splendid, erudite column by Ben Wright for The Telegraph:

Ever since the writer Thomas Carlyle coined his rude epithet about economics, the world of letters and the 'dismal science' have circled each other warily. But in his new book about the history of the Nobel Prize, Avner Offer, a professor of economic history at Oxford University, says economics actually has more in common with literature than, say, physics.
It isn't an obvious pairing. Literature's understanding of economics is, at best, patchy and simplistic. Polonius's advice in Hamlet to 'neither a borrower nor a lender be' is well-meaning. But, taken too literally, it would undermine the entire global financial system.
Yet the literary canon, in all its vastness, does occasionally, almost accidentally, brush up against economics.
The monetary principle known as Gresham's law, which states that 'bad money drives out good', is said to have been prefigured by Aristophanes in The Frogs. King Lear, who thought that 'distribution should undo excess/and each man have enough', was clearly a bit of an old Marxist. And when Levin isn't mowing in the fields or moping after Kitty in Anna Karenina he's voicing Leo Tolstoy's slightly warped views on agricultural reform.
But those novels that really try to grapple with economic issues – like George Orwell's The Road To Wigan Pier, which discusses why many of those that might best benefit from socialism are most implacably opposed to it – either date quickly or – like Ayn Rand's paean to capitalism Atlas Shrugged – are borderline unreadable.
There are rare exceptions. The second part of Johann Wolfgang von Goethe's Faust is essentially an extended treatise on fiat money (currencies that are deemed legal tender by governments) and the perils of expansionary monetary policies.
Mephistopheles (the devil), disguised as a court jester, advises an indebted emperor to issue promissory notes against his country's yet-to-be-discovered gold, saying: 'Such paper's convenient, for rather than a lot / Of gold and silver, you know what you've got. / You've no need of bartering and exchanging, / Just drown your needs in wine and love-making.'

David Fuller's view
Alternatively, enjoy the Royal Opera's production of Gounod's Faust – one of Bryn Terfel's best roles.

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